Silvergate Capital CEO predicts that the pains for cryptocurrencies will continue in the short term. According to the expert, cryptocurrencies will see some more pain in the next few quarters.
Silvergate CEO sees short term “painful” for cryptocurrencies
According to crypto-focused bank Silvergate Capital (SI), the bear market for cryptocurrencies is not over yet. Silvergate Capital CEO Alan Lane said in a recent interview that the pains will continue in the short term. But Lane adds that due to rising interest rates and inflationary pressures, investors should not compare the current bear market with previous ones.
Alan Lane recommends these to stay away from the bear market
Due to the downturn in crypto, analysts are expecting a weak quarter for various crypto companies, from exchanges to miners. But Silvergate’s second-quarter earnings beat the trend. Silvergate Exchange Network (SEN), a fiat on-ramp for bitcoin markets, posted a 34% year-over-year increase in US dollar transfers in the second quarter, while net income increased 85% year-over-year.
Lane says the way to avoid the pitfalls of a bear market is to stay away from FOMO. In his own words:
We really try to stay in our own lane and don’t follow the latest fashion, but we really only focus on what we do well and essentially just solve problems for our customers.
bitcoin loan
Leveraged crypto-linked financial institutions have declared bankruptcies one by one in recent months. On this issue, Lane says he remains positive about using Bitcoin for his lending program:
We are certainly interested in lending against Bitcoin. We believe this is one of the best loans we’ve ever made and we want to continue to grow it.
Recently, Silvergate used the SEN Leverage program as a $205 million term loan to Michael Saylor’s MicroStrategy so that the business intelligence firm could buy more Bitcoin. Lane says the lending platform was created with the recognition that it would bring volatility. He also adds that the recent crypto sales are a good stress test for Silvergate to show that it can withstand the volatility in its lending business model.
What on-chain data says about Bitcoin
According to CryptoQuant analysis, Bitcoin has been fluctuating below its realized price since June 13. This is indicative of a possible market bottom. But Arcane research has shown an alarming trend in whale activity since Terra’s collapse. Analyst Vetle Lunde estimates that more than 236,237 BTC have been liquidated since May 10. He also says that this is the culprit of large institutions.
236,237 BTC.
That’s the amount of known selling of bitcoin since May 10th by large institutions. Most of the selling is related to forced selling, and some is not. pic.twitter.com/wNLjgvvFmn
— Vetle Lunde (@VetleLunde) July 21, 2022
BTC is currently trading just below $22,300 after a slight drop the past day. However, there are Bitcoin cries to break the $23,000 resistance after another bullish rebound. We will see how Bitcoin will react to this level only later in the weekend.
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